Monday, July 23, 2012

BNY Mellon Earnings Review: Litigation Charge Wrecks Performance

BNY Mellon reported QE June 2012 financial results on Wednesday, July 18

Earnings per share were a disappointing $0.39, which included a previously announced (7-6-12) litigation charge of $212 million after-tax or an $0.18 loss per share. There has been a slow, long-term decline in profitability. CEO Gerald Hassell will need some time to recoup this litigation loss and hopefully turn around the overall performance deterioration. The 11-quarter average EPS is $0.50.

Metric, QoQ Change, YoY Change
Total Assets: $330.28 billion, +10%, +8%
Net Revenues: $3.62 billion, -1%, -6%
Net Income: $496 million, -21%, -34%
Earnings per Share: $0.39, -25%, -34%

At QE 6-30-12 I have downgraded BNY Mellon to a "B" from a "B+" at the prior QE 3-31-12. This is on a scale of A+ to G-. The median rating is "D" and the average rating at QE 3-31-12 was "C". Financial position strength is weighted more than financial performance. The QE 3-31-12 bank ratings review is here.

NEW YORK, July 18, 2012 -- The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE:BK) today reported second quarter net income applicable to common shareholders of $466 million, or $0.39 per common share including the previously announced litigation charge of $212 million (after-tax) or $0.18 per common share, compared with $735 million, or $0.59 per common share, in the second quarter of 2011 and $619 million, or $0.52 per common share, in the first quarter of 2012.

“We continue to grow investment management and investment services fees reflecting the strength of our business model. We are delivering on our operational excellence initiatives, investing for future growth and positioning our businesses to deliver the full breadth of our global capabilities. Our strengthened capital positions us as a preferred counterparty, and provides us greater flexibility for ongoing investment while continuing to return capital to shareholders,” said Gerald L. Hassell, chairman, president and chief executive officer of BNY Mellon. “Also in the second quarter, we were able to put significant litigation behind us with no material impact on our capital,” added Mr. Hassell.


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